Great blog posts about macroeconomics

Is Weather to Blame?

After the latest job report was announced William Dudley, New York Federal Reserve President, released a statement saying that the BLS report showed weaker numbers than expected as the unemployment stayed the same at 5.5%. (http://www.bls.gov/news.release/empsit.nr0.htm) Mr. Dudley believes that one of the major factors that affected the weather include a “harsher” than usual winter across the eastern portion of the U.S and that these numbers may be temporary.

However, you can’t place all the blame on the weather. Yes it may have slowed down growth to an extent but one has to consider other factors that affect the U.S and global markets. Such factors include the strength of the dollar, the ongoing economic fiasco in Greece, and rising oil prices.

Record dropping oil prices acted as a tax break to many across the U.S. Those effects were brief, have weaned away, and have began to cause more harm than good as prices have began to rebound and rise again. Since the supply for oil is greater than the demand oil companies have begun to lay off workers. Next, the ongoing fiasco in Greece caused the dollar to appreciate vs. the euro. Importing goods from the U.S has become more expensive to international countries. This has caused economic growth to slow which in turn has caused little to no help to the employment rate.

What does this all mean? March’s unemployment rate was affected by more than the weather. These factors may continue to affect future job reports unless they are addressed. William Dudley and those at the Federal Reserve may need to reconsider an increase in the Federal Reserve benchmark rate to later in the year when the job reports finally meet their expectations. That is unless they want to attribute slower economic growth in Q3 to a scorching summer…

Post navigation

3 thoughts on “Is Weather to Blame?”

I definitely agree with the fact that many different factors can contribute to unemployment figures. Although a slow-down in production can directly be attributed to harsh weather conditions and the consequences thereafter, it may be a stretch for Mr. Dudley to assume that extreme weather directly causes weaker employment growth figures. If anything, one could argue for the opposite case that plowing companies probably hired more workers and experienced record-high profits this winter…

The dollar appreciation for the U.S maybe one of the biggest problems. Glad you touched on it. It must be devastating for companies with many foreign investors because they are more willing to by from more countries outside of the U.S. They are taking a hit and so will GDP if the dollar continues to grow as it is. However, this is a great time to go abroad and travel

As stated in the post, there are most likely many other factors that would affect the unemployment rate in the U.S. aside from weather. However, it would be interesting to look at data from differing regions in the U.S., and compare areas that experienced a harsh winter with others that didn’t. This may help to form the conclusion of whether or not the weather was a significant factor in the stagnant unemployment rate. Furthermore, we will need to see how markets change over the next few months as the weather improves across the nation. I would assume that the largest factor in this phenomenon would be the strengthening U.S. dollar, as mentioned in the post.